Be wary of the risks and consequences of Litigation in Modern Methods of Construction

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30 May, 2023

Sheroze Nadeem

In recent years, the construction industry in the United Kingdom has witnessed a significant shift towards modern methods of construction (MMC). MMC encompasses a range of innovative techniques and technologies that streamline the construction process, enhance efficiency, and promote sustainability. While MMC has brought several benefits to the construction sector, it has also introduced unique challenges, including potential disputes and commercial litigation. This article explores the impact of modern methods of construction on commercial litigation in the UK.

1. Increased Complexity and Technical Disputes

Modern methods of construction often involve the use of advanced technologies, such as off-site prefabrication, modular construction, and digital design tools. These techniques offer improved precision, reduced construction time, and enhanced quality control. However, the complexity associated with MMC can lead to technical disputes. Issues may arise regarding design flaws, compatibility of components, or non-compliance with building regulations. Such disputes may require expert opinions and detailed analysis, prolonging the resolution process.

2. Supply Chain Disputes

MMC often relies on a sophisticated supply chain involving numerous parties, including manufacturers, suppliers, contractors, and subcontractors. This complex network of relationships can give rise to disputes related to delays in the delivery of components, substandard materials, or disagreements over pricing and payment terms. The interdependency of different entities within the supply chain can complicate the identification of responsibility, leading to protracted litigation.

3. Allocation of Risk and Liability

With the advent of MMC, the allocation of risk and liability has become a key consideration in construction contracts. Traditional forms of construction contracts may not adequately address the unique risks associated with MMC, such as design responsibility, off-site manufacturing, and transportation of pre-assembled components. Ambiguities in contractual terms and responsibilities can result in disputes between project stakeholders, necessitating legal intervention to resolve disagreements and clarify liability.

4. Insurance Coverage and Claims

MMC introduces novel risks that may not be adequately covered by conventional insurance policies. Insurers and construction professionals are still adapting their products and coverage to align with the requirements of MMC projects. Inadequate insurance coverage can lead to disputes and potential litigation when unforeseen events, such as structural defects or project delays, occur. Resolving insurance claims related to MMC requires a nuanced understanding of the technology and associated risks.

5. Building Regulations and Compliance

MMC techniques often challenge traditional approaches to building regulations and compliance. While MMC can provide innovative solutions to meet regulatory requirements, the lack of established standards and guidelines specific to these methods can create disputes over compliance. Authorities may interpret regulations differently, leading to conflicts that require legal resolution. The evolving nature of MMC necessitates ongoing engagement with regulatory bodies to ensure clarity and consistency in interpretation.

Modern methods of construction have escalated the UK construction industry, bringing numerous benefits, including increased efficiency, sustainability, and quality. However, as with any technological advancement, MMC also presents unique challenges and potential sources of commercial litigation. The complexity of MMC techniques, supply chain issues, risk allocation, insurance coverage, and compliance concerns all contribute to the potential for disputes in the sector. To effectively address these challenges, parties must proactively engage in comprehensive contract drafting, risk management, and dispute resolution mechanisms. Often parties do not do this and find themselves facing issues which may be avoided. it is important to discuss matters with professionals specialising in construction litigation who play a crucial role in navigating the evolving landscape of MMC and ensuring the efficient resolution of disputes, ultimately supporting the continued growth and success of the modern construction industry in the UK.

For more information contact Sheroze Nadeem in our Construction & Infrastructure department via email or phone on 01772 220163. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

Learn more about our Construction & Infrastructure department here

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